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Summary: Disbursements are the out-of-pocket costs your lawyer pays on your behalf to complete a real estate transaction, such as title searches, registration fees, execution searches, and tax certificates, then passes on to you at cost with no markup. They are billed on top of the legal fee and HST, and together they can add up to as much as the fee itself.
Disbursements are the costs and expenses a lawyer incurs on behalf of a client in a real estate transaction. The lawyer doesn't make a profit on them; they simply pass the cost of these services through to the client. It's worth understanding disbursements up front, because they can add up, and in some cases equal or even surpass the quoted legal fee once added together.
When you call a real estate law firm for a quote, the lawyer usually gives a flat rate (or an hourly rate and an estimate of the time required) and notes that the final cost also includes HST and "disbursements." Because the term is unfamiliar, many people focus on the headline fee and end up with a false impression of the full cost of closing. Disbursements are an important part of the process: they cover the searches, registrations, and document handling that make sure the property transfer is properly registered and everything is in order, so it pays to know what they are and to budget for them.
What are common real estate disbursements?
Most real estate disbursements fall into a handful of categories. Here's a quick overview before the detail:
Disbursement | What it covers | Charged by |
Title search fees | Confirming the property title is clear | Teranet (via Teraview) |
Registration costs | Registering the transfer or mortgage on title | Government + Teranet |
Execution search fees | Checking for creditor claims against your name | Land registry system |
Transaction levy surcharge | Funding Law Society programs and services | Law Society of Ontario |
Tax certificate | Confirming property tax status and arrears | Municipality |
Courier and postage | Delivering and mailing documents | Courier / postal service |
Bank and wire fees | Sending and receiving closing funds | Bank |
Title search fees
The lawyer needs to conduct a title search via Teraview to ensure the property title is clear and there are no outstanding issues that could affect the transaction, and there's a fee to do so. Teraview is the online system lawyers and other real estate professionals in Ontario use to register and manage land registry records. It's owned by Teranet, a private corporation, and lawyers pay a fee to use it because it isn't provided free by the government. Those fees cover the cost of maintaining and updating the system and providing support and training to users.
Registration costs
A lawyer pays two fees every time they register a title transfer, record a new mortgage, or register any other document on title: a statutory fee and an ELRSA fee. These are charged by the government and Teranet, respectively, for the services needed to complete the registration.
The statutory fee is charged by the government for registering the property title in the buyer's name. It is set by the government and is the same for every property, subject to regular increases.
The ELRSA fee, also known as the Electronic Land Registration System Administration fee, or E-reg fee, is charged by Teranet for maintaining and updating the electronic land registry system. Years ago, lawyers could register title transfers by waiting in line at the Land Registry Office and having the transaction recorded physically in a book; registering electronically was a luxury for which Teranet charged extra. Today title transfers and other title documents must be registered electronically, so the ELRSA fee applies to every registration.
Execution search fees
Filing an execution against a client's name is a legal process by which a creditor can seize the client's property to satisfy a debt, which can include real estate if the client owns it. A real estate lawyer is required to search for executions against a client's name as part of the due diligence in a transaction, because an execution could affect the client's ability to sell or transfer the property and could lead to complications or delays.
If the lawyer discovers an execution against the client's name, they'll work with the client to address it so it doesn't affect the transaction. That may involve negotiating with the creditor, obtaining a release of the execution, or taking other legal action.
Transaction levy surcharge
A transaction levy surcharge is charged by the Law Society of Ontario to help fund programs and services that benefit the legal profession and the public. It applies to certain legal services, including real estate transactions, except in purchase transactions where the buyer has obtained a title insurance policy, in which case the levy is waived.
Tax certificate
A tax certificate provides information about the property's tax status, including how much property tax is owed and whether there are any tax arrears that will need to be paid from the sale proceeds. The city or county that administers property tax collection charges a fee for the certificate, which varies from one tax office to another.
Courier and postage fees
The lawyer may need to pay for courier services to deliver documents to the buyer or other parties involved in the transaction, and may also incur postage costs for mailing documents.
Bank and wire fees
To move funds to the necessary parties, a lawyer needs to receive and send wires, and there is a cost to both receive and send them.
Frequently asked questions
What is the difference between legal fees and disbursements?
Legal fees are what the lawyer charges for their work on your file. Disbursements are out-of-pocket costs the lawyer pays on your behalf, such as title searches, registration, and tax certificates, that you reimburse at cost. Your quote usually lists the legal fee, HST, and disbursements separately.
Does the lawyer make a profit on disbursements?
No. The lawyer passes disbursements through at cost. They are reimbursements for amounts the lawyer pays to third parties like Teranet, the government, and the municipality, not a source of profit.
How much do disbursements add up to?
It varies by transaction, but disbursements can add up, and in some cases equal or surpass the quoted legal fee once combined. Budget for both. For the full picture of what a deal costs, see our guide to the costs involved in a real estate transaction.
When is the transaction levy surcharge waived?
On a purchase where the buyer obtains a title insurance policy, the Law Society transaction levy surcharge is waived.
Why do I pay a fee just to register the title?
Registration runs through Ontario's electronic land registration system, which is operated by Teranet, a private corporation, alongside a government statutory fee. Both fees fund the services needed to record the transfer or mortgage on title, so they're passed on as disbursements.
About the author
Benjamin Berry is a co-founder and principal lawyer at Ownright. He works on Ontario residential real estate transactions and writes to make the costs and steps of buying and selling a home clear for the people going through them.
At Ownright, we focus entirely on Ontario residential real estate law. We understand the ins and outs of disbursements and help both buyers and sellers understand their obligations, pairing a digital platform that gives you a clear summary of every cost with an in-house legal team you can reach by chat, email, or video call. Whether you're a first-time homebuyer or an experienced investor, you can start your closing online or get in touch with any questions.
Important note: This article is not legal advice. No one should act, or refrain from acting, based solely on the information in this post or any linked materials without first seeking appropriate legal or professional advice.
